Tony Mitchell: Residential Property Managers Association Chairperson on the new

Kiwis seem to be on the move. 

Ministry of Housing and Urban Development data shows that half of New Zealand tenancies are less than two years old, and just 1% have been in place for more than 18 years. 

The average tenancy is now 50 months long, up from 28 in 2010, and the median has reached 25, up from 14 in 2010.  

Residential Property Managers Association Chairperson Tony Mitchell told Kerre Woodham that it comes down to flexibility – mostly on the part of the tenant. 

He says most landlords would prefer a long-term agreement, but tenants prefer the flexibility of shorter contracts as it allows them to move or upsize as needed. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Carrywood and Morning's podcast from News Talks, he'd.

Speaker 2 (00:10):
Be We've been discussing renting and the tune that turnover
when it comes to renters. Data from the Ministry of
Housing shows that the median tendancy in New Zealand is
twenty five months, just over two years, which seems an
impossibly short length of time to be staying in one place,

(00:32):
even taking into account the mobility of young people and students.
A landlord says that they believe it is in their
experienced tenants only stay for two or three years then
move on. I would prefer tenants to stay long term.

(00:53):
There are a lot of costs in finding a new tenant.
My prevailing thought is that tenants want long term tenancies,
but my experiences they prefer the flexibility to move when
their life changes. And another says, renters you'll find move
based around their work situation, promotion or changing companies often

(01:15):
means a move. You're right, few landlords would exit a
good tenant. New Zealand is a small market, hence the
short term commitments. How many renters are on a five
year lease or longer. So that's from our landlords. Residential
property Manager. Residential Property Managers Association chairperson Tony Mitchell joins me. Now,

(01:38):
very good morning to you.

Speaker 3 (01:40):
Yes, good morning.

Speaker 2 (01:42):
Why aren't the tenancies longer? Do you believe?

Speaker 3 (01:47):
Well, there's many reasons, most of which you've just read
out certainly do apply. But ultimately, at the highest level,
I think it's flexibility that both tenants and landlords would like.
And you got to remember that tenants and landlords have
their own sort of profile and their own sort of

(02:08):
like our needs or stage in life that they're going through.
So there's a lot of different factors at play, but
it mostly comes down to flexibility.

Speaker 2 (02:19):
But I would have thought landlords would prefer to have
a reliable tenants stay in one place. I can understand
flexibility on the part of the tenant, say if they
need a bigger place because they have they have a family,
or if they need to move for work, but why
would a landlord want to flick a good tenant on.

Speaker 3 (02:42):
So look, you're absolutely right, the majority of landlords want
tenants to stay. And so what the majority of the
tendency agreements start out as is a one year fixed
term and then the landlords would normally look to renew
that year on year for one year. The majority of
tenants probably don't take the fixed renewal. They go on

(03:05):
to what we call a periodic which allows them to
now give twenty one day's notice, where the landlord would
have to give ninety days. So yes, I agree, absolutely
agree the landlords do want long term but as I
said before, the profiles of landlords are different. And if
you think about what we've just gone through over the
last two years with interest rates having gone up considerably,

(03:29):
for landlords don't necessarily have a whole lot of cash
in the bank or a whole lot of equity. Many
of them might have one property or two properties. One
it may have been originally their family home and they've
still got a mortgage on it, and so these landlords
have to sometimes dip into their own pockets and cover
the any shortfall. And what we saw is that a

(03:51):
lot of landlords in February of twenty twenty four and
even up till now put their rental properties on the market.
So having a contract that's for tendency agreements that's for
one year allows them that option to be able to
do that if they find themselves in that situation.

Speaker 2 (04:11):
Sure, and I guess if you are a tenant moving
into a new rental, like our first caller this morning,
Harry was like he felt that the landlord was unfairly,
unfairly looking at the wear and tear situation and was
far too knitpicky, and also lived next door to them,

(04:33):
so he will be moving on after a year. I
guess there's a sort of feeling out process between a
new tenant and a new landlord to see if you
fit each other.

Speaker 3 (04:44):
Yes, so look, it sounds like that landlord is renting
out that property directly and it was also living next door,
so that comes with a horrible complication. Yes, so looks
sometimes it works actually really well, but sometimes it doesn't.
So you know, there is I guess what I would say,
that's why tendency services are there to be able to
have some sort of rules of regulation that a tenant

(05:07):
or a landlord can go through. But it does also
I guess a highlight that we need regulation within the
industry as well, greater regulation.

Speaker 2 (05:16):
Yeah, when it comes to the turn and when it
comes to the availability of properties. At the moment, I
read two very odd stories, one that landlords were using
all sorts of inducements to entice tenants into their properties.

(05:38):
The other was that rents have never been so high.
I mean, surely, surely the market dictates if there are
more supply than demand, then the price comes down. That
doesn't seem to be the case.

Speaker 3 (05:51):
We yeah, look, supply and demand has been the factor
for decades, and so what we've seen is that rental
prices have slowly gone up over the years as the
population has increased greater than the supply. And we've also
seen that the cost of rent versus the average salary
has gone up to over those years. So it has

(06:14):
become more and more challenging. And what we've what we've
seen just recently, and I remember the articles that you're
referring to, there is a what I think is a
bit of a blip, a short term blip, where there's
various factors that have creating a dip in the rental price.
So the net positive migration has slowed and the housing

(06:39):
the number of houses that have come on the market
from twenty twenty two has kind of wrenched its highest point.
So what we've seen is that there's almost almost I
wouldn't see over supply, but there is a lot of
properties on the market and there's less people out there
actually looking to actually change. There's also uncertainty. There's been

(06:59):
job losses as well, so the market has slowed down
in rental prices have come back, but look, if you
look at the trend for the last twenty years, you
know this is going to be from what we can see,
a short term phase and net positive migration will still improve.
There's still going to be a need to actually generate
more housing and in fact, a lot of developers had

(07:21):
a bit of a nasty surprise with the cost of
goods going up also with the over supply of houses,
and they haven't been able to sell their properties at
the mark at the price that they wanted. So that's
meant to pullback on the development that's been going in
for properties, for rental properties as well. So I do
think that there's going to be a continued trend of

(07:42):
rental increases and I think it's about trying to get
that balance right and looking at what the under underlying
causes are.

Speaker 2 (07:48):
All right, I thank you very much for your time.
Tony Mitchell, Residential Property Managers Association Chairperson.

Speaker 1 (07:53):
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